RUSSIA: X5 eyeing fresh takeover targets in bid to expand
Russian food retailer X5, which is mulling an US$800m-$1bn share offer to buy hypermarket chain Karusel, is also interested in purchasing peers Kopeika and Ramstore, analysts told just-food on today (5 April).
"They are looking for growth opportunities beyond Karusel and have expressed interest in Kopeika and Ramstore," said Natasha Zagvozdina, an analyst with Renaissance Capital in Moscow.
Supermarket chain Kopeika and hypermarket operator Ramstore could be worth $1bn and $600m respectively, Zagvozdina estimated.
X5, which owns Russia's leading supermarket chains Pyaterochka and Perekrestok, said this week it will seek a share offer to buy Karusel, fund other expansion and pay down debt. It also said it is likely to revive previous plans for a $960m bond sale.
Zagvozdina said the company is likely to purchase Karusel, which has a $1.2bn-$1.5bn price tag, through a combination of equity and debt as raising $1bn through a share sale could lead to a stock overhang.
"They would be crazy if they paid for Karusel with the share offer proceeds only," Zagvozdina said. "If they did this the stock would fall 20% [because of the inclusion of new shares] and shareholders would see their stakes diluted."
Apart from growing its supermarket franchise, X5 wants to open 70 hypermarkets in Russia in five years and buying Karusel, Kopeika and Ramstore will help it achieve that goal, analysts said.
Russia's hypermarket and supermarket sector is growing strongly, fuelled by a consumption boom on the back of robust economic growth.
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